Lump sum death benefits question (follow-up to July '99 thread on this

[Guest Letocha]

A client maintains a DB plan that pays a fixed death benefit to a designated beneficiary upon the participant's death if the participant has already retired. I'm trying to figure out whether the payments are included in the recipient's income. I'm wrestling with the following ideas, many of which came up at least tangentially in a thread on this Board from last summer:

1. The $5000 death benefit exclusion of Section 101(B) was repealed, effective 8/20/96. Does this repeal mean that the death benefit distributions can be eligble rollover contributions, if they otherwise qualify, even if the specific $5000 exclusion has been taken away?

2. Is there any way to characterize these death benefits paid out of general assets as excludable life insurance contract benefits under Section 101(a)? One idea might be to stretch the reasoning of PLRs 199921036 and 200003020, in which death benefits paid under collectively-bargained welfare benefit plans were found to be excludable under Section 101(a). Does anyone have thoughts on whether this a viable option?